Rollercoaster ride for cement stocks

Cement stocks, including Grasim Industries and Gujarat Ambuja Cements recovered by close of the trading on Wednesday, after a drastic fall in early-market hours.

The recovery could be attributed to the realisation that the government's decision to remove the import duties on cement, in an attempt to curb the rising prices, would not have a major impact on the bottomlines of cement firms.

Analysts said the imported cements may still be costly even after the duty cuts.

The government exempted cement importers from paying a 4 per cent additional customs duty and waived the 16 per cent countervailing duty on the material yesterday. 

FEELING THE HEAT
	Market prices as on (Rs)			Trading volumes
	Apr-03	Apr-04	Today' low	Apr-03	Apr-04
ACC	704.8	714.45	680	1453000	4294000
Birla Corpn	190.1	186.4	182	94914	281000
Chettinad Cement	407	407.7	407.7	1949	876
Dalmia Cem (Bharat)	366.5	351.5	350	254000	10601
Gujarat Ambuja Cement	105.4	104.95	100.25	3570000	19592000
India Cements	155.94	151.3	146.25	2355000	8663000
JK Cement	147.8	145.3	139	79056	111695
Madras Cements	2620	2542.85	2536	3178	8537
Shree Cement	912.9	907	851.05	10980	84369
UltraTech Cement	712.7	677.7	672.55	35316	215300

Citigroup estimates that the landed cost of cement will decline from Rs 242 per bag to Rs 213 per bag. A bag of cement is available at Rs 235 in Mumbai and Rs 225 in Chennai.

Analysts at Emkay Research have estimated the import parity price at Rs 200 a bag from Rs 250 a bag prior to the duty cuts. The import parity price had come down by Rs 20 a bag as the customs duty was scrapped and Rs 30 a bag on account of a cut in CVD and customs duty.

Shares of Gujarat Ambuja, which opened lower by about 3 per cent, ended at Rs 104.95, down 0.43 per cent from the previous close.

Grasim Industries also shed over 2 per cent in opening trades. The counter hit the day's low of Rs 2,030 in the early hours. But, huge buying came in to lift the stock to Rs 2,094 during the day, before profit booking in closing minutes saw the shares ending at Rs 2063.90, down 1.92 per cent from yesterday.

The bellwether BSE Sensex rose by 162 points or 1.28 per cent to 12,786.77 points on Wednesday.

"Wednesday's fall in early trading was an immediate reaction to the government's announcement yesterday. I don't see any major impact on the profit margins at least for the April-June quarter," said an analyst with a brokerage house.

Shares of mid-cap and small cap cement companies also fell after the government's move. Prices of Ultratech, however, could not recover from the early dip and ended lower by about 5 per cent at Rs 677.70. India Cement opened at Rs 151.05 before falling to Rs 146.25, a loss of over 6 per cent from yesterday.

It wiped off about 3 per cent of its values at Rs 151.30. Another small cap stock, Prism Cement shed 1.3 per cent to Rs 30.20 at close. It had fallen to Rs 29.30 during the day.